The eurozone debt crisis is deepening and threatens to re-erupt on a larger scale.

The eurozone debt crisis is deepening and threatens to re-erupt on a larger scale when the liquidity cycle turns, a leading panel of economists warned in a clash of views with German officials in Berlin.

“Debts above 130pc of GDP for Italy and 170pc for Greece are a recipe for disaster once we go into the next downturn,” said Professor Charles Wyplosz, from Geneva University.

“Today’s politicians believe the crisis is over and don’t want to hear any more about it, but they have not tackled the core issues of fiscal union and public debt,” he said, speaking at Euro money’s annual Germany conference.

Charles Dalara, former head of the International Institute for Finance and chief negotiator for global banks in Greece’s debt-restructuring, said little has be done to put the Eurozone on a viable footing, even if sovereign bond yields in southern Europe have fallen to record lows.

The end of the Euro

How can the debt “crisis” be getting any worse? The mandarins of the great collective EU assured everyone that things were getting better, the corner had been turned, happy days again.

Could it be they lie?

Incredible. The project has become such a farce that one of the solutions is for the most dynamic economy to become less so. And the bankrupt countries of the south being able to issue more debt is a reason to rejoice – you cannot pay the three credit cards you have got, so here are another five to keep you going – unbelievable.

Isn’t it obvious that when Eurozone banks fail the stress test they are going to be told to confiscate bank deposits as was done in Cyprus? Surely, even with the inverted sort of economics which prevail in the Eurozone it must be obvious that some banks are bound to fail and that some governments won’t have the wherewithal [or the will] to bail them out. Since no preparations are being made for the ESM to help there can only be one possible source of the necessary funds [and don’t say ‘the shareholders’ ‘cos I’m too young to die of laughter].

Bond yields are low now, but these situations can change much faster than people tend to expect – fundamentals are still broken, the next crisis could happen as quickly as confidence can vanish.

This optimism of national governments is sharply at odds with the view of almost every foreign-based economist attending the event.

The Euro is dead! Long live the Euro. Meanwhile the Euro rises, rises, rises… Are these investors stupid? Probably not.